Kieran Healy

Thu May 1, 2003

A follow-up to the previous post. Desai notes in passing that the pace of liberalization is different in different countries. My friend Marion Fourcade-Gourinchas and her co-author Sarah Babb have a very interesting article forthcoming in the AJS called “The Rebirth of the Liberal Creed: Paths to Neoliberalism in Four Countries.” It’s a comparative study of Chile, Britain, Mexico and France. A “neoliberal transition” happens when a country adopts a set of economic policies characterized by “tight money and market mechanisms.” The authors show that each country began moves in this direction in response to a balance-of-payments crisis. But while the precipitating event was similar in each case, and the policy outcomes can all broadly be construed as “neoliberal,” this wasn’t a simple convergence on the same model.

Each country’s polity adopted the new policies for different reasons and understood them in different ways, Fourcade-Gourinchas and Babb argue. The label of “neoliberalism” became an important one as the Keynesian consensus groaned in the ‘70s and finally gave way altogether in the ‘80s. But precisely what policies were adopted varied a good deal, especially at the beginning of the transition when governments were trying to figure out what a neoliberal policy was. Sometimes it meant monetarism, sometimes tax-cuts and welfare state retrenchment, sometimes freeing labor-market restrictions, and so on. In this respect the new order was cultural as much as institutional: a new set of legitimate policies were emerging out of the failure of the old.

A consequence was that the transition happened differently in different countries. France and Mexico had strong states able to manage distributional conflict, and staffed with technocrats who came up with the specifics of the neoliberal policies. They managed a “pragmatic” transition to the new regime beginning in the mid-1980s. By contrast, Chile and Britain had a great deal of open distributional conflict and the new ideas originated in the political parties rather than the state bureaucracy. The result was a much rougher, more “ideological” transition that took place earlier.

A nice aspect of the paper is the way it focuses on these transitions from the point of view of those who executed them. The authors, in other words, are interested in how these new ideas looked at the time rather than in ex-post reconstructions of gradual convergence. It’s a very nice paper.